Huggins v. Tri-County Bonding Co.

Decision Date08 November 1985
Docket NumberTRI-COUNTY,No. CC953,CC953
Citation337 S.E.2d 12,175 W.Va. 643
PartiesWilliam F. HUGGINS, Sr., etc., Plaintiff, v.BONDING CO., etc., and John C. Myers, Defendants, and Joseph W. MYERS, et al., Defendants and Third Party Plaintiffs, v. NATIONWIDE MUTUAL FIRE INS. CO., etc., Third Party Defendant.
CourtWest Virginia Supreme Court

Syllabus by the Court

1. The general rule is that a homeowners liability insurance policy that covers loss from damages for negligent personal acts includes coverage for negligent entrustment absent any express exclusion to the contrary.

2. "Whenever the language of an insurance policy provision is reasonably susceptible of two different meanings or is of such doubtful meaning that reasonable minds might be uncertain or disagree as to its meaning, it is ambiguous." Syllabus Point 1, Prete v. Merchants Property Ins. Co., 159 W.Va. 508, 223 S.E.2d 441 (1976).

3. "An insurance policy which requires construction must be construed liberally in favor of the insured." Syllabus Point 3, Polan v. Travelers Ins. Co., 156 W.Va. 250, 192 S.E.2d 481 (1972).

4. Where a home owner negligently entrusts a nonowned vehicle to his son who injures a third party, exclusionary language in the homeowners liability policy in relation to the ownership, maintenance, operation or use of a land motor vehicle does not exclude coverage for suits for negligent entrustment where the initial liability coverage is for loss from damages for negligent personal acts.

5. "The term 'business pursuits', when used in a clause of an insurance policy excluding from personal liability coverage injuries 'arising out of business pursuits of any insured', contemplates a continuous or regular activity engaged in by the insured for the purpose of earning a profit or a livelihood." Syllabus Point 1, Camden Fire Ins. Ass'n v. Johnson, 170 W.Va. 313, 294 S.E.2d 116 (1982).

Phillips, Gardill, Kaiser, Boos and Hartley, R. Dean Hartley, Wheeling, for plaintiff Huggins.

Herbert G. Underwood, and Irene M. Keeley, Steptoe & Johnson, Clarksburg, for Myers.

Goodwin & Quinn, Suzanne Quinn, Susan Y. Dodd, Thomas A. Goodwin, Wheeling, for Nationwide Ins.

MILLER, Chief Justice:

The Circuit Court of Marshall County asks us to resolve two related certified questions in order to determine whether Nationwide Mutual Fire Insurance Company (Nationwide) is obligated to defend its homeowners policyholder in a negligent entrustment action.

The action arises from a two-vehicle accident which resulted in injuries to the plaintiff's ward, Mary Lou Blakemore. One of the vehicles was driven by the defendant John Myers, the eighteen-year-old son of the defendant Joseph Myers. The car driven by John Myers was owned by Tri-County Bonding Company (Tri-County). Joseph Myers is the president of Tri-County and owns all of its stock. In addition to naming Tri-County and John Myers as defendants, the plaintiff named Joseph Myers as a defendant alleging the father was negligent in entrusting his son to use the car.

Joseph Myers owned what is termed an Elite Homeowners Policy issued by Nationwide, and asked Nationwide to defend him against the negligent entrustment action. Nationwide refused on the ground that the liability protection in the homeowners policy only covered negligent "personal acts" and that the father was acting in his corporate, not personal, capacity when he entrusted the company car to his son. Furthermore, Nationwide claims the policy excludes coverage for claims involving motor vehicles and for claims arising out of business pursuits. It asserts the accident occurred while the Tri-County car was being used for business purposes.

Nationwide's version of the facts is that the father, acting as president of Tri-County, asked his son, who was a trainee in the business, to use the Tri-County car to deliver a corporate contribution to his son's school's Spanish Club which was holding a fund raising event known as the "Spanish Fiesta," and that while on this corporate errand, the son was involved in the accident.

Joseph Myers asserts in his brief that his son planned to attend the school dance to meet his date and that the permission to use the company car was primarily for that purpose and only incidentally to deliver the check.

After Nationwide refused to defend Joseph Myers, he filed a cross-claim against Nationwide. The Circuit Court of Marshall County ruled Nationwide had a duty to defend Myers and certified the following questions for our resolution: (1) Does Nationwide's homeowners liability policy generally afford coverage for a claim of negligent entrustment? and (2) If Nationwide's policy does generally afford coverage for a claim of negligent entrustment, do any of the policy's exclusions apply so as to except the claim in this case?

I. The Coverage

The initial coverage language in Nationwide's policy relied on by Myers is found in Section II Protection Against Liability, which provides insurance against "loss from damages for negligent personal acts...." 1 This is also coupled with the claim that in the initial portion of the policy, there is very broad language summarizing the policy benefits, which language states: "ELITE POLICY Protecting your home and possessions against loss from Fire, Windstorm, Theft and other perils ... plus claims arising from Legal Liability." (Ellipsis in original).

Nationwide denied coverage, relying on the exclusionary language of Section II, which excludes coverage for "the ownership, maintenance, operation or use ... of land motor vehicles." 2 A second exclusion, termed business pursuits, was also relied on to deny coverage. 3

It is clear that the liability coverage is quite broad as set out in Section II, Protection Against Liability. This provides coverage "against loss from damages for negligent personal acts...." This broad coverage concept is reinforced by the provisions of Section II(A), which obligates Nationwide "[t]o pay on behalf of the Insured all sums which he shall become legally obligated to pay (1) as damages because of bodily injury, sickness or disease, and death at any time resulting therefrom, sustained by any one person...."

There is no language in the liability coverage section which confines liability to acts arising on the premises covered by the policy. 4 We think it is clear that the liability policy coverage is sufficiently comprehensive to cover negligent personal acts occurring on or off the insured's premises committed by an insured. This would include a negligent entrustment claim such as asserted in the present case. 5

The general rule is that a homeowners liability insurance policy that covers loss from damages for negligent personal acts includes coverage for negligent entrustment absent any express exclusion to the contrary. See, e.g., United Fire & Cas. Co. v. Day, 657 P.2d 981 (Colo.Ct.App.1982); Upland Mut. Ins. Co. v. Noel, 214 Kan. 145, 519 P.2d 737 (1974); Lalomia v. Bankers & Shippers Ins. Co., 35 A.D.2d 114, 312 N.Y.S.2d 1018 (1970), aff'd, 31 N.Y.2d 830, 291 N.E.2d 724, 339 N.Y.S.2d 680 (1972); Annot., 6 A.L.R.4th 555 (1981). 6 We, therefore, find that because Nationwide's homeowners policy covers negligent personal acts, it does cover losses due to negligent entrustment.

II. The Exclusions
A. Automobile Use

The parties are in sharp disagreement over the meaning of the language in the exclusion section of the liability portion of the policy which withdraws coverage for "the ownership, maintenance, operation or use ... of land motor vehicles." 7 Nationwide asserts that a number of courts have treated this language as excluding coverage where a negligently entrusted vehicle causes injury to a third party. 8

Joseph Myers, however, argues that in most if not all of these cases, the exclusionary language was broader because it was prefaced with the phrase "arises out of the ownership, maintenance, operation or use, including loading or unloading of a land motor vehicle." 9 This argument proceeds on the basis that where there is no "arising out of" language, then courts have found that the exclusion does not bar a negligent entrustment suit. 10

Unfortunately in many of the cases relied upon by the parties, there is no thorough discussion of the issues. Some courts appear to be motivated by the thought that by styling the policy a "homeowners" coverage, this means that the liability phase of the policy is limited to occurrences happening on the described premises. See, e.g., Safeco Ins. Co. v. Gilstrap, 141 Cal.App.3d 524, 533, 190 Cal.Rptr. 425, 431 (1983); Insurance Co. of North America v. Waterhouse, 424 A.2d 675, 682 (Del.Super.Ct.1980); Williamson v. Continental Cas. Co., 201 N.J.Super. 95, 101, 492 A.2d 1028, 1032 (1985). As we have earlier noted, there is no premises limitation contained in the liability section of the policy involved in this case.

We do not disagree with the principle advanced by some courts that the liability feature of a homeowners policy is not meant to be coextensive with the ordinary automobile liability policy. E.g., Fillmore v. Iowa Nat'l Mut. Ins. Co., 344 N.W.2d 875, 878 (Minn.App.1984); Bankert v. Threshermen's Mut. Ins. Co., 105 Wis.2d 438, 446, 313 N.W.2d 854, 858 (Ct.App.1981); 7A J. Appleman, Insurance Law & Practice § 4500.04 (1979). However, this does not mean that in certain situations there may not be an occasional overlap.

Simply because a person can purchase automobile liability insurance that will provide protection against losses due to the use of automobiles does not necessarily negate coverage under a comprehensive homeowners policy. A policy must be interpreted on its own terms without reference to what other insurance is owned or available to the insured. Not all home owners are car owners. Hence, it would be unreasonable to deny liability protection to a home owner when the liability, in some way, involved someone else's car that the home owner had no reason or interest to insure....

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